Experian 2012 Annual Report Download - page 45
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43
GovernanceBusiness reviewBusiness overview Financial statements
Financial risk management
The risks and uncertainties that are specific
to our business together with more general
risks are set out in the risks and uncertainties
section of this report. Our financial risk
management focuses on the unpredictability
of financial markets and seeks to minimise
potentially adverse effects on our financial
performance.
We seek to reduce exposures to foreign
exchange, interest rate and other financial
risks. Detailed disclosures in respect of such
risks are included in the notes to the Group
financial statements and the key features are
summarised below.
Foreign exchange risk is managed by:
•Entering into forward foreign exchange
contracts in the relevant currencies in
respect of investments in entities with
functional currencies other than US
dollars, whose net assets are exposed to
foreign exchange translation risk;
•Swapping the proceeds of certain bonds
issued in sterling and euros into US
dollars;
•Denominating internal loans in relevant
currencies to match the currencies of
assets and liabilities in entities with
different functional currencies; and
•Use of forward foreign exchange contracts
for certain future commercial transactions.
Interest rate risk is managed by:
•Use of both fixed and floating rate
borrowings;
•Use of interest rate swaps to adjust the
balance of fixed and floating rate liabilities;
and
•Mix of duration of borrowings and interest
rate swaps to smooth the impact of
interest rate fluctuations.
Credit risk is managed by:
•Dealing only with banks and financial
institutions with strong credit ratings,
within limits set for each organisation; and
•Close control of dealing activity with
counterparty positions monitored
regularly.
Liquidity risk is managed by:
•Long-term committed facilities to ensure
that sufficient funds are available for
operations and planned expansion; and
•Monitoring of rolling forecasts of projected
cash flows to ensure that adequate
undrawn committed facilities are available.
2012 EBIT by currency
2011 EBIT by currency
US dollar
Brazilian real
Sterling
Other
2012 Borrowings by currency
2011 Borrowings by currency
US dollar
Sterling
Other
Borrowings by currency are stated after the effect
of forward foreign exchange contracts and cross
currency swaps.